It's only outperforming major assets because people are investing in it. It doesn't matter whether those "people" are made up of hedge funds, individuals or other investors as long as there's still people.

Its volatility isn't necessarily that bad compared to other assets - people like to convince themselves that Bitcoin could easily go to zero or something, but silver has gone up and down several times. At times, it's basically multiplied its price by several and lost in the same way. Doesn't matter whether it happens in a couple of years like Bitcoin or over several years like silver.

In future, the volatility will be very similar to precious metals - high, but based on the confidence that the price can't just go to zero and make everyone lose their money like fiat could.

I think they might be worried about SEC, since it's known for it's negative attitude to Bitcoin investments. Bitcoin is still too hot, some people associate it with money laundering and extortions. Hedge funds will go in when the agencies will give them a green light.